Intellectual Property Law

Envisioned Effects of E-Commerce in the European Union?s Single Market

By Martha L. Arias

The Economic and Social Committee of the European Community Commission envisioned the effects of e-commerce in the European single market in 2001. These envisioned effects are similar to those e-commerce has caused in most countries? markets. Reproducing them in this article is helpful to determine how accurate those predictions were back then and serves as example for those developing markets whose e-commerce is still at a developing stage and for other less-advanced economic regional groups.

The Economic and Social Committee (ESC) of the European Community Commission (ECC) studied the effects that e-commerce could cause in the European Union?s (EU) single market. These effects were first introduced by a summary of what e-commerce for the EU was in 2001. Then, the effects were divided in four major categories. Within the introduction, the ESC noted that e-commerce in 2001 accounted for a small proportion of the EU overall trade; particularly, B2C (business-to-consumers). B2B (business-to-business) was the most used business model in the early stages of the EU e-commerce. Some of the reasons for the slow beginning of e-commerce were (1) lack of confidence with regard to the protection of privacy; (2) concerns about security of payment methods; (3) lack of or incoherent regulatory framework; and (4) different levels of telecommunication infrastructure among EU member states. Yet, despite its sluggish beginning, e-commerce later showed fast development. Additionally, the ESC sustained that if measures were not taken to further develop e-commerce in the EU, the EU would miss opportunities for its economic and social development and the gap between Europe and the United States would grow.

General Effects and Recommendations

According the ESC, the first category of effects e-commerce would cause in the EU single market were categorized as general effects and also presented as recommendations. For instance, (1) e-commerce required constructive dialogue between consumers and manufacturers/distributors to develop consumer confidence; (2) new technologies were to be developed with the aim of providing massive access, so that other less advantaged sectors of society could enjoy e-commerce benefits; (3) European and worldwide legal frameworks for e-commerce were required to offer consumers security and guarantees; (4) alternative dispute resolution methods were to be implemented as well as distance payment methods; (5) SMEs will be developed and great opportunities will be available for them; (6) consumers should be able to enforce their rights in their place of residency and out-of-court settlements before legal proceedings should be instituted; (7) consumer protection standards should be uniformed among member states; (8) member states should develop new competition policies; including rules regarding mergers and network infrastructure; (9) payment systems were to be developed as well as reduction of cost of cross-border money transfers; (10) tax obstacles should be reduced; (11) data protection should become priority for member states. Data protection laws should be implemented and adapted to new technologies and a new economic context.

Importance of E-Commerce

The second category of the e-commerce effects in the EU single market were based on the importance of e-commerce. The ESC said that B2B would be one of the most important areas of e-commerce in the EU. Yet, B2C should steadily increase for the following years. Financial services and the software industry would play major role in e-commerce transactions. Thus, their rapid development was expected. E-Commerce will include other business models such as interactive TV (t-commerce) and mobile commerce (m-commerce). Thus, online sales of digital and non-digital goods and services would not be the only concentration of e-commerce transactions. The ESC expected that the introduction of the euro would boost the importance of e-commerce in Europe. This is important because, the ESC said, Europe was lagging behind the U.S. to the use of the Internet and the importance of e-commerce due to factors such as (1) a single language, a single currency, low telephone charges, and lack of risk capital.

 As we can see, the general effects predicted by the ESC in 2001 are exactly the most significant effects e-commerce has shown during the past decade. Indeed, most of these recommendations have been fully implemented in the EU. Regarding the importance of e-commerce in the EU, the introduction of the euro and the implementation of harmonized directives has contributed to the increase of e-commerce transactions in this continent.

Full post as published by IBLS Internet Law Blog on August 16, 2009 (boomark / email).